The European Commission has decided to refer Sweden
to the European Court of Justice for its discriminatory pension tax legislation.
Premiums paid by employers for pension insurance taken with insurers established
in other EU Member States or in countries in the European Economic Area (EEA)
are treated less favourably than contributions to domestic schemes.

Under the Swedish tax legislation, premiums paid by employers for
occupational pension insurance taken with insurers established in other EU
Member States or the EEA countries are taxed as salary in the hands of the
employee and pension payments are tax exempt; whereas contributions to domestic
schemes are exempt and only pension payments are taxed.

The legislation clearly restricts the possibilities for insurers established
elsewhere within the EU or EEA to sell insurance policies in Sweden and
dissuades employers from subscribing to foreign insurance policies. The taxation
of foreign pension insurance premiums as benefits of the employee makes the
subscription of foreign policies unattractive not only because the taxation
takes place earlier than in cases where the occupational pension insurance has
been taken out with Swedish insurers, but also because the marginal progressive
tax rate applicable to the employee's income is likely to be higher during
his/her active working life than it is after his/her retirement.

The Commission therefore considers that the respective Swedish rules
constitute an obstacle to the free movement of persons (Articles 18, 39 and 43
EC; Articles 28 and 31 EEA), the freedom to provide services (Article 49 EC and
36 EEA) and the free movement of capital (Article 56 EC and 40 EEA).

Since the Swedish Government did not follow the reasoned opinion issued by
the Commission on 25 July 2006, the Commission has decided to refer the case to
the European Court of Justice.

The Commission's case reference number is 2000/4538.

New: For the press releases issued on infringement procedures in the
taxation or customs area see: